The operations manager for the state-owned fiber optic network that connects the state’s schools, libraries and hospitals says the system’s value is well into the hundreds of millions of dollars. Ric Lumbard is also as the interim director of the Iowa Communications Network.
“I think the bandwidth potential we have right now is greatly significant and would easily be north of $300 million if you were to try to take this out and duplicate this,” Lumbard says.
A private company recently offered two bids to buy the network, one for $15 million and the other was just a dollar. Both bids were rejected and now Governor Branstad is suggesting the network be leased. Legislators are trying to sort through the details. Private companies worry out-of-state competitors may swoop in and lease all or parts of the network, without having to invest millions like the companies that already operate in Iowa.
“I think there’s language in the bill that gives a right of first refusal to local companies, so that should help limit that opportunity for those kind of transgressions to happen,” says Michael Sadler, an executive at Century Link.
Senators are trying to draft language that also would forbid companies from “cherry-picking” parts of the Iowa Communications Network where there are more potential customers. The state has provided subsidies to ensure every Iowan has access to traditional telephone service and Sadler says similar subsidies may be needed for low-income Iowans who cannot afford broadband for their homes.
“I think there could be some end users that would need a subsidy to make that leap to subscribing to broadband,” Sadler says. “Century Link offers a program for low-income customers. We offer a lower rate if you meet certain requirements in terms of income. Even the take rate on that has been very low, so I think there still is a segment that just doesn’t see why they need broadband in their home or business.”
Customer demand is a “key piece to this puzzle” of expanding broadband service in Iowa, according to Sadler. Sadler and Lumbard made their comments this weekend during an appearance on Iowa Public Television’s “Iowa Press” program.